HOW TO CREATE A TRADING STRATEGY?
WHAT IS A TRADING STRATEGY?
Trading rules that systematize it, bring clarity, orderliness and predictability of the result. You can take a ready-made strategy and adapt it for yourself. And you can create your own
The main idea of the strategy, its rationale
The idea should be rational, based on market patterns that you understand. For example, trading with a trend or pullbacks. On technical or fundamental analysis , with or without indicators
A good trading strategy is not complicated, but simple. A large number of rules makes the strategy inconvenient and understandable for the trader himself.
Timing of trading
What timeframes do you want to trade on?
How much time are you willing to devote to trading?
What time will you trade?
Selection of trading instruments
Pick those tools. which you understand well
The strategy can be both universal (for many tools), and sharpened for specific toolsChoice of tools for analysis
1) When the main idea of the strategy emerged and it became clear how, when and what to trade, you need to decide on the tools of market analysis
2) If the strategy is indicator, then select indicators (from 2 to 5)
3) If the strategy is not indicator, then select patterns, figures of graphical analysis
4) If the strategy is based on fundamental analysis , then it is necessary to decide on which news to trade.
Trade entry rules
Under what conditions will you enter the market based on what signals?
When will you not open a trade?
What orders will you use market or pending?
Stop Loss and Take Profit
Under what conditions do you close a position?
How will you set stop loss and take profit?
Write down the risk per order, risk per day / week / month
(in percent or in currency)
Determine the maximum allowed number of losing trades
per day / week / month
Calculate the volume of a trading position (lot)
When there is a strategy, what's next?
Check the effectiveness of your strategy on the strategy tester or on a demo account
Maintain trade statistics to identify weaknesses of the strategy and remove them